Franklin Templeton Mutual Funds: Safe Investment Haven?

Franklin Templeton Mutual Fund, a subsidiary of Franklin Templeton Investments, is a US-based financial services company with a strong global presence. With a history dating back to 1947, the company has established itself as a leading investment firm, known for its expertise across a full range of asset classes. While the company has experienced significant growth and recognition over the years, the safety of investing in its mutual funds cannot be guaranteed due to the inherent risks associated with market-linked investments. However, regulatory bodies like SEBI in India tightly regulate the mutual fund industry to protect investors' interests. As an investor, it is essential to evaluate and choose funds that align with your financial goals and risk tolerance.

Franklin Templeton's reputation and history

Franklin Templeton, a subsidiary of Franklin Resources, Inc., has a long history in the investment industry. Founded in 1947 as Franklin Distributors, Inc. by Rupert H. Johnson Sr., the company initially operated as a retail brokerage firm on Wall Street. Johnson admired American polymath Benjamin Franklin, for whom the company is named, due to his espousal of frugality and prudence in saving and investing.

The company's first line of mutual funds, the Franklin Custodian Funds, was designed to appeal to a wide range of investors with its conservative approach. Over the years, the company expanded and diversified its investment offerings. In 1973, Franklin Distributors acquired Winfield & Company and relocated its offices to California. This move significantly increased their assets under management and marked a period of steady growth.

In 1986, the company's stock began trading on the New York Stock Exchange under the ticker symbol "BEN", honouring Benjamin Franklin. The same year, they opened their first office outside North America in Taiwan, signalling their global expansion. By 1989, Franklin had acquired L.F. Rothschild Fund Management Company, and their assets under management had grown to over $40 billion.

One of the most significant milestones in the company's history came in October 1992 when they acquired Templeton, Galbraith & Hansberger Ltd. for $913 million. This acquisition led to the adoption of the well-known name Franklin Templeton. The combined entity continued to grow and strengthen its position in the investment industry.

Franklin Templeton has a reputation for offering a diverse range of funds, including bond funds under the Franklin brand, international funds under the Templeton brand, and value funds under the Mutual Series brand. They have also been recognised for their expertise across various asset classes and their presence in key geographies worldwide.

However, Franklin Templeton's reputation was impacted by an incident in April 2020 when their management shut down six debt funds due to redemption pressure and liquidity issues. This decision led to anxiety and stress among investors, creating a negative perception of the company. Nevertheless, Franklin Templeton has been working to restore faith by focusing on repayments and positive returns.

Regulation and investor protection

Franklin Templeton Mutual Fund is part of Franklin Templeton Investments, a US-based financial services company. Franklin Templeton Mutual Fund was established in India in 1996 as Templeton Asset Management India Pvt. Limited. The company is registered with the Securities and Exchange Board of India (SEBI), which tightly regulates the mutual fund industry and ensures investors' interests are protected.

As with any market-linked investment, there are no guarantees that your capital will be safe. However, you can evaluate and choose a fund that suits your goals and risk appetite. Franklin Templeton Mutual Fund offers a range of schemes, including equity, hybrid, and debt funds, and it is important to understand the risks associated with each type of fund before investing.

To invest in Franklin Templeton Mutual Fund, you must complete the Know Your Client (KYC) process, which includes providing proof of address and identity. This helps to ensure that investors are informed and aware of the risks and are protected from fraudulent activities.

Additionally, as a global investment firm, Franklin Templeton is subject to various regulations and laws in the countries in which it operates. The company is listed on the New York Stock Exchange, and as such, it must adhere to the exchange's rules and regulations, providing further transparency and protection for investors.

In terms of investor protection, Franklin Templeton has a dedicated Investor Relations Officer, and investors can contact the company directly with any queries or concerns regarding their schemes. The company also provides a range of resources and tools to help investors make informed decisions, including a mutual funds calculator and portfolio health checker.

Types of funds offered

Franklin Templeton offers a wide range of funds to its clients, including mutual funds, exchange-traded funds (ETFs), private funds, and separately managed accounts. The company also provides schemes such as equity, fixed income, multi-asset, and alternative investment options. Here is a detailed overview of the types of funds offered by Franklin Templeton Mutual Fund:

Equity Funds

Franklin Templeton offers several equity funds that focus on providing capital appreciation over the long term. These funds invest in a diverse range of companies, including large-cap, mid-cap, and small-cap stocks. Examples include:

• Franklin India Bluechip Fund
• Franklin India Equity Advantage Fund
• Franklin India Equity Fund
• Templeton India Equity Income Fund

ELSS Funds

Equity-Linked Saving Scheme (ELSS) funds offered by Franklin Templeton provide investors with tax-saving opportunities in addition to capital growth. These funds are suitable for those seeking long-term capital appreciation and income tax benefits under the relevant tax laws. An example is the Franklin India Taxshield Fund.

Fixed Income Funds

Franklin Templeton also provides fixed-income funds that aim to generate consistent income for investors. These funds typically invest in debt securities and money market instruments. Examples include:

• Franklin India Corporate Debt Fund
• Franklin India Banking & PSU Debt Fund
• Franklin India Floating Rate Fund

Hybrid Funds

The company offers hybrid funds that combine equity and debt investments to provide a balanced portfolio. These funds cater to different risk appetites, from aggressive to conservative. Examples include:

• Franklin India Equity Hybrid Fund
• Franklin India Debt Hybrid Fund
• Franklin India Multi-Asset Solution Fund

International Funds

Franklin Templeton also has a presence in international markets, offering funds that invest in global securities. These funds provide exposure to international companies and markets. An example is the Franklin Asian Equity Fund.

Sector-Specific Funds

The company also provides sector-specific funds that focus on particular industries or themes. These funds invest in companies directly or indirectly engaged in specific sectors. For example, the Franklin Build India Fund concentrates on infrastructure and associated sectors.

Franklin Templeton offers a comprehensive range of funds catering to diverse investor needs and risk profiles. The company's funds provide exposure to various asset classes, sectors, and investment strategies, allowing investors to build well-diversified portfolios.

Performance and returns

Franklin Templeton Mutual Fund, part of Franklin Templeton Investments, has a long history of strong performance and returns. The company was founded in 1947 and has since become one of the world's largest independent, specialised global investment managers.

In 1979, the Franklin Money Fund began a growth surge that made it Franklin's first billion-dollar fund and marked the start of significant asset growth for the company in the 1980s. Franklin's total assets under management (AUM) doubled (or nearly doubled) every year for six consecutive years, starting in 1980. By 1989, Franklin's assets under management had grown from just over $2 billion in 1982 to more than $40 billion. Notably, the crash of 1987 had little impact on Franklin's income and bond funds.

In 1992, Franklin acquired Templeton, Galbraith & Hansberger Ltd., leading to the common name Franklin Templeton. This acquisition further bolstered the company's presence and expertise in the mutual fund space.

Franklin Templeton continued to expand and diversify its investment offerings, including through the acquisition of Legg Mason, Inc. in 2020, establishing the firm as one of the world's largest independent, specialised global investment managers. As of July 31, 2008, Franklin Resources, Inc. managed over $570 billion in total assets worldwide.

In terms of specific fund performance, Franklin Templeton offers a diverse range of mutual fund schemes. As of September 30, 2024, the fund house's AUM stood at Rs 1,14,879.86 crores, with 17 equity schemes, 7 hybrid schemes, and 9 debt schemes. Some of the largest Franklin Templeton mutual fund schemes as of September 2024 include the Franklin India Flexi Cap Fund, Franklin India Smaller Companies Fund, and Franklin India Focused Equity Fund.

The Franklin India ELSS Tax Saver Fund, for example, has generated an XIRR of 37.52% over the past 5 years, demonstrating strong returns on investments.

It is important to note that while Franklin Templeton has a strong track record, past performance does not guarantee future results. Market conditions and other factors can always impact investment returns. However, Franklin Templeton's long-standing presence in the industry, diverse range of investment offerings, and historical performance indicate a strong foundation for potential investors to consider.

Investment process and requirements

Investing in Franklin Templeton Mutual Fund is a simple and convenient online process. Here is a step-by-step guide to the investment process and requirements:

• Registration and Login: Begin by registering yourself on a platform that offers Franklin Templeton Mutual Funds, such as Groww. If you already have an account, simply log in.
• Identity Verification: Upload the necessary identity proof documents, such as a Central or State Government ID card, PAN, Aadhaar, Passport, Voter ID, or Driving License.
• Address Proof: Provide proof of your permanent address. This can be any of the identity proof documents that include your address.
• Investment Period: Choose your preferred investment period. This will depend on your financial goals and how long you want to stay invested.
• Risk Level: Select your risk preference—whether you want a low, mid, or high-risk investment fund. This choice will depend on your risk tolerance and investment strategy.
• Fund Selection: Choose your preferred Franklin Templeton Mutual Fund. Research and evaluate the various funds offered by Franklin Templeton, considering factors such as fund performance, fees, and investment objectives.
• Investment Type: Decide if you want to invest a lump sum amount or through a Systematic Investment Plan (SIP). A lump sum investment is a one-time payment, while an SIP allows you to invest smaller amounts at regular intervals.

After completing these steps, your Groww account will reflect the Franklin Templeton Mutual Fund you have purchased within 3 to 4 working days.

Frequently asked questions